Shrinking reimbursement from insurance threatening outlook for rural hospitals

12/08/2014 02:18 PM

LEXINGTON — Rural hospitals in Kentucky are facing some of the biggest challenges in their histories and some may be forced to close their doors state auditor Adam Edelen told the Kentucky Chamber on Monday.

Edelen, who will be releasing an audit on the plight on the states rural hospitals in January, told members of the Kentucky Chamber of Commerce who were attending their annual legislative preview conference, that the difficult economy and managed care are the primary drivers of the difficulty in rural health care.

Generally, Medicare reimburses hospitals around 90 percent of cost while Medicaid reimbursement is around 80 percent.

“When some hospitals have 70 to 80 percent of their share being from government insurance, that isn’t manageable, it’s not sustainable over the long term because what it assumes is balance in the system where non-government insurance, that is private insurance that the people get from their employers, actually reimburses providers at above the rate of cost,” Edelen said.

Edelen also talked about what a rural hospital means in the areas that they serve from a business standpoint since many of them are the largest employer and provide the highest paying jobs in the areas that they serve.

“In every county that hospitals operate, they pay a significantly higher wage than is the county standard, Edelen said.

Edelen says that his family, who farmed in Meade County, is great examples of the importance of rural hospitals in the areas they serve.

“My father’s hand looks like hamburger, my grandfather and uncles are both missing fingers,” Edelen told the crowd. “The reason that they didn’t bleed out in that Meade County field is that Flaherty is not that far from E’town. In my fathers case, he could be stabilized at Hardin Memorial and then sent on to Kleiner Kutz in Louisville for reconstructive surgery.”

While conducting the audit, Edelen said he heard concerns from a number of people on the plight of rural hospitals and how their loss could have devastating effects on the areas that they serve.

“We heard from doctors who say the business is becoming too complex, we’ve heard from county and political leaders who are worried about their ability to develop the economy over the long term for fear that their hospital is going to close,” Edelen said.


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